Leidos (LDOS) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 adjusted EBITDA margin of 13.5% and strong organic revenue growth, with Q2 2024 revenue at $4.13 billion, up 7.7–8% year-over-year.

• Net income rose 54% to $324 million; non-GAAP diluted EPS up 46% to $2.63, and adjusted EBITDA up 33% to $559 million.

• Raised full-year guidance for revenue ($16.1–$16.4 billion), adjusted EBITDA margin (approx. 12%), and non-GAAP EPS ($8.60–$9.00).

• Continued focus on operational improvement, strategic investments, and prudent capital deployment.

• Backlog reached $36.5 billion, with net bookings of $4.0 billion in Q2 and a book-to-bill ratio of 1.0.

Financial highlights

• Q2 revenues were $4.13 billion, up 7.7–8% year-over-year; net income was $324 million, and operating income was $475 million (margin 11.5%).

• Adjusted EBITDA was $559 million (13.5% margin), up 33% year-over-year.

• Non-GAAP diluted EPS was $2.63, up 46% year-over-year; free cash flow was $351 million.

• Operating cash flow was $374 million; days sales outstanding improved to 58 days.

• Ended Q2 with $823 million in cash and $4.7 billion in debt; leverage ratio at 2.0–2.4x.

Outlook and guidance

• FY24 revenue guidance raised to $16.1–$16.4 billion; adjusted EBITDA margin expected at approximately 12%.

• Non-GAAP diluted EPS guidance increased to $8.60–$9.00; operating cash flow guidance remains at $1.3 billion.

• Expect Commercial & International margins to recover in H2; National Security and Digital margins to moderate.

• Anticipate temporary headwinds in VBA disability exam business due to VA budget constraints, with rebound expected in Q4.

• Management expects to meet liquidity needs over the next 12 months through operations, cash, and credit.